Abstract
Mushrooms are highly perishable agricultural commodities, and as such their marketing is invariably associated with high transaction costs. Despite the mushroom enterprise gaining popularity in a number of sub-Saharan African (SSA) countries, where production is dominated by rural-based small-scale farmers, no research has been done to study the nature and complexity of transaction costs encountered by these producers in attempting to participate in mainstream supply chains. This study uses cross-section data obtained in 2011/2012 from mushroom producers in Swaziland to study the effects of transaction costs on producers’ choice of marketing channels and the quantity of mushrooms supplied. Having used Cragg’s model for analysis, the results indicate that producers’ decisions of where to sell their mushrooms are significantly affected by household labour endowment, production capacity, access to cooling facilities and market information, and producers’ bargaining position. Meanwhile, the quantities of mushrooms sold are significantly influenced by the difficulty in accessing reliable transport and producers’ level of uncertainty in meeting buyers’ quality requirements. The study concludes by highlighting potential interventions that could minimise marketing and transaction costs and further improve the general agricultural marketing environment in Swaziland.
Highlights
Oyster mushroom production was officially introduced in Swaziland through a United Nations Development Programme (UNDP)funded initiative in 2001 with an intention to assist rural-based small-scale farmers to diversify and improve their financial independence and livelihoods
The study sought to analyse the effects of transaction costs on the choice of marketing channels and quantity of mushrooms sold by producers in Swaziland
Having used Cragg’s model for analysis, the research indicates that the difficulty in accessing market information and lack of bargaining power reduces producers’ likelihood of participating in remunerative markets
Summary
Oyster mushroom production was officially introduced in Swaziland through a United Nations Development Programme (UNDP)funded initiative in 2001 with an intention to assist rural-based small-scale farmers to diversify and improve their financial independence and livelihoods. Preference for mushrooms, the oyster, over other prospective enterprises was mainly influenced by the abundance of production inputs in Swaziland (e.g. substrate materials1), their ease of production, suitability in diverse agro-ecological zones, and their relatively high nutritional and medicinal qualities (Chang & Miles, 2004). Worth noting as well, is that market participation is not costless as attempts to commercialise smallholder agriculture in Africa have not yielded the expected results primarily due to lack of proper institutions and infrastructure (Fafchamps, 2004). These challenges often result in increased marketing and transaction costs, which underlie the failure by farmers to meet market demands for quality, quantity and timeliness (Karaan, 1999). Transaction costs are incurred before (ex ante) and after (ex post) the actual exchange and are broadly conceptualised as the tangible and intangible costs of searching for a partner with whom to exchange a product, screening potential trading partners to ascertain their credibility, bargaining with potential trading partners to reach an agreement, transferring the product, monitoring the agreement to ensure that its conditions are fulfilled, and enforcing the exchange agreement (Jaffee, 1995)
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